Don’t get caught on the tip of an iceberg when sailing through a regulatory investigation

Companies are today facing an unprecedented compliance burden as technological developments can not only facilitate wrongdoing on a global scale from different corners of the business, but also assist regulators in their investigations. Managing these risks and the potential for follow-on claims represents a key challenge for business in the coming years.

Our colleagues from Australia, the UK and China have written an interesting thought-piece that considers some of the flow-on implications of being caught up in a regulatory investigation including cartel investigations. In particular, the post explores potential claims by private parties against corporate entities either alone or as part of a class action, and related privilege issues.

The key lesson for companies is that where wrongdoing is identified, a fine balance must be found between cooperating with the regulator, maintaining privilege in those discussions and still providing sufficient disclosure to the market to avoid lawsuits on the basis of failure to disclose relevant information. They must also have an eye to what information could be used against the company in any future law suit.